In two separate cases, one in Maryland and the other in Pennsylvania, homeowners were persuaded to utilize cashout refinances for investments that would pay off their loans early. But in both instances, the programs turned out to be a sham. Other cases involving mortgage-related crimes to see recent court activity involve several crooked bank executives, two former managers at CitiFinancial Inc. and a California hard-money lender. A number of defendants are accused of stealing from clients’ accounts.
Andrew Hamilton Williams Jr. was convicted on Nov. 10 of running a fraudulent investment business and operating a Ponzi scheme, the U.S. Attorney’s Office for the District of Maryland announced. Williams owned Metro Dream Homes, which promised borrowers that its “Dream Homes” program would enable their mortgages to be paid off early. Clients would take out home-equity loans to make initial investments of $50,000 and additionally pay administrative fees of $5,000. In return, they were promised that the company would make their house payments and have their loans paid in full within five to seven years.
Customers were told that their funds would be invested in automated teller machines, flat screen televisions that showed paid business advertisements and electronic kiosks that sold goods and services. Hundreds of thousands of dollars spent on presentations at luxury hotels gave the impression of a thriving business. By the time the scam was uncovered, more than a thousand investors had put up $78 million — with much of the new money going to pay off obligations to original investors. Once Metro Dream Homes stopped making the mortgage payments, borrowers were left holding the bag.
A cease-and-desist order was issued in August 2007 by the Maryland Securities Commissioner. Williams faces up to 30 years in prison at a sentencing hearing scheduled for March 30, 2012. Also convicted were former Metro Dream Home chief financial officer Michael Anthony Hickson, former president Isaac Jerome Smith and former operations vice president Alvita Karen Gunn. Carole Nelson and Charlotte Melissa Josephine Hardmon previously pleaded guilty.
More than $65 million was collected by Image Masters and owner Wesley A. Snyder from 800 borrower-investors looking to make a buck through Snyder’s scheme. Borrowers believed they would take out cashout refinances, and Image Masters would use investment earnings to pay down the loans more quickly. But only $39 million made its way to the lenders that Snyder was supposed to pay, and many borrowers wound up owing more as a result.
Snyder was sentenced to more than a decade in prison back in 2008. But earlier this month, a Berks County, Pa., judge ordered six former employees to pay $1.4 million in restitution, the Reading Eagle reported.
An announcement earlier this month from the Department of Justice indicated that David Findel, the former chief executive officer of failed Worldwide Financial Resources, was sentenced on Dec. 12 to two years in prison for bankruptcy fraud. Findel already was sentenced to 63 months in prison on Sept. 27 for preparing $11 million in fraudulent loan packages on mortgages for sale that had already been sold to other secondary investors.
More than $11 million in payments for modification services were collected from in excess of 4,000 borrowers by 1st American Law Center between 2008 and 2010, a U.S. Attorney statement Friday said. High-pressure sales tactics and “outright lies” were used to convince clients to fork over between $1,995 and $4,495 each. The defendants falsely claimed they had a team of attorneys who pre-screened clients and that they had a 98 percent success rate in obtaining modifications.
“Among other ruses, employees pretended that their grandmothers got a loan modification through the company, that they had a special relationship with a particular client’s bank, or that the company had helped thousands of happy homeowners with loan modifications,” the Justice Department stated. “All of these statements, however, were untrue.”
Guilty pleas were made on Dec. 16 by 1st American Law Center founder Gary Michael Bobel and telemarketers Scott Thomas Spencer, Mark Andrew Spencer, Roger Trent Jones and Travis Corey Iverson.
Celina Villarreal pled guilty on Oct. 31 to stealing more than $8 million from the accounts held by five customers of her employer, Compass Bank, a Justice Department announcement said. She used the money to purchase vehicles, invest in businesses and buy a condominium on South Padre Island, Texas. The theft began in 2009 while she was an international banking officer at the Laredo, Texas, bank.
Villareal faces up to four decades in prison at her sentencing, which is expected to be scheduled soon.
In the call report for the quarter ended Sept. 30, 2006, Metropolitan Savings Bank vice president and director Donna Shebetich indicated that none of the Pittsburgh-based bank’s mortgages were delinquent. But, according to the U.S. Attorney for the Western District of Pennsylvania, more than $7 million in loans were past due at least 30 days.
Metropolitan Savings Bank failed in 2007. Shebetich pled guilty in June and was sentenced on Nov. 18 to 72 months in prison.
It was a 15-year sentence for Tustin, Calif., hard-money lender Mark Alan Helsing, the Orange County District Attorney’s office announced. Helsing allegedly stole $6.9 million from 12 investors in a Ponzi and real estate fraud scheme. His companies were Sea View Investments, HLHS Financial Services Inc., Foothill Realty and Sea View Mortgage.
Police were alerted to the scheme following complaints about bounced checks. Helsing was arrested in court at a guilty plea hearing for an unrelated case during June 2009.
“He stole from his private investors, most of whom were long-time friends who trusted the defendant, by keeping the money they lent for borrowers and not funding the loans as promised,” the county claims. “Helsing supplied investors with bogus interest payments by taking small sums from their initial investment and providing them with falsified and forged documents to prevent them from discovering that the loans had not been repaid.”
A six-year prison sentence was handed down on Nov. 18 to S. Pope Cleghorn Jr. by U.S. District Judge Timothy C. Batten Sr., a Justice Department announcement indicated. Cleghorn, who was the president and CEO of Hometown Bank of Villa Rica in Georgia before it was acquired by SunTrust Bank in 2008, was paid $130,000 in cash kickbacks by his buddy Russell T. Long to approve two loans for $2.8 million. Long pleaded guilty in February and was scheduled to be sentenced last Thursday.
Cleghorn also signed a subordination agreement on one of Long’s loans without the bank committee’s knowledge.
Coral Mortgage needed to prop up its balance sheet. So co-operators Matthew Kent and David Rubin, along with former Woodbury Financial employee Joshua Gould, convinced a retired investor to put up $1.2 million to be used as collateral for operations in return for monthly interest payments. The investor was promised that the funds wouldn’t be spent and would be placed in a secure trust account.
But Kent and Rubin used $250,000 for Coral’s operating expenses, according to a U.S. Attorney’s Office announcement, while Gould spent the rest on personal expenses and investments.
Kent pled guilty, according to the Nov. 21 press release. Rubin and Gould previously pled guilty.
A Florida jury convicted Randolph Branham of bribing a loan officer for $50,000 and conspiring to commit fraud, the U.S. Attorney for the Northern District of Florida announced. Southwest Georgia Farm Credit, ACA, was allegedly defrauded on a $500,000 loan for the purchase of a penthouse condominium in Destin, Fla.
Four other defendants — Florida residents Chris Cadenhead, Jackie T. Fair and Jane M. McDonald and Georgia loan officer Larry J. Malone — have already pled guilty in the case. Malone allegedly approved a second loan to Branham for $700,000, which is where the bribe money came from.
From April 2007 until August 2010, former BNY Mellon bank data entry associate and trust operations coordinator Danielle M. Keane created unauthorized checks from McDemott Inc.’s pensioners’ account, according the U.S. Attorney for the Western District of Pennsylvania. Keane covered up her crimes by adjusting the account ledger to make it look like the money was re-credited back into the pension account, leading the pensioner to believe that there was more money in the account than there actually was.
By the time the scheme unraveled, 71 illegal wire transfers had been made for $452,038.
Keane was sentenced to 33 months in prison, according to the Nov. 16 news release.
Pueblo, Colo., mortgage broker Anthony Paglione was arrested last year over allegedly mishandling $350,000 in payments for borrower David Roscover. The Pueblo Chieftain reported last week that Paglione’s trial was called off while that Pueblo District Attorney’s office changes the criminal complaint.
Former CitiFinancial Inc. branch manager Anthony Moya pled guilty this month to obtaining loans for unqualified borrowers and misappropriating $269,722, the Justice Department said. Nominee borrowers were used to hide Moya’s interest in the transactions. The deal includes the dismissal of an indictment against Moya’s wife, Eunice, who was accused of aiding and abetting Moya.
Another former CitiFinancial employee, Julie Phillips, was sentenced on Oct. 31 to 12 months in prison for embezzling $100,000 from the Citigroup Inc. subsidiary while she was a district manager in Vermont, according to the U.S. Attorney’s Office for the District of Vermont. Phillips allegedly caused fraudulent checks to be issued in payment of fictitious obligations. She ultimately obtained the proceeds for her own use while covering up the crime.
Stephanie Horne, who was employed at a GreenPoint Mortgage servicing center in Georgia, has pleaded guilty to lying to the U.S. Secret Service about diverting $94,000 from customer accounts in 2004 to her family and friends, according to a story from the Ledger-Enquirer. She is scheduled to be sentenced Feb. 23, 2012, by U.S. District Judge Clay D. Land.
Mortgage broker Robert G. Cusic admitted that he conspired to make people believe they were being criminally investigated, mostly by the Internal Revenue Service, and his special relationship with an IRS special agent could make their problems go away at a cost of $20,000, a Nov. 28 news release from the Department of Justice said. Cusic admitted the goal of the conspiracy was to collect around $80,000 in fees for co-conspirator Thomas G. Frey and to cause the victims to sell some of the properties.
Loan closings for borrowers who refinanced through Amerilend Inc. were handled by Targa Escrow. Both firms were owned by Steve Zaven Kessedjian. But the proceeds on one refinance transaction didn’t make it to the intended recipients.
Kessedjian was arrested last month following an indictment by a federal grand jury on mail fraud charges, the U.S. Attorney for the Eastern District of California announced. He allegedly utilized $57,343 in proceeds on one refinance transaction that were intended to pay off credit card bills for his use. The victims reportedly lost their home to foreclosure because they couldn’t afford to pay both the mortgage and the unpaid creditors.
Benicia, Calif.-based Prestige Loans Corp. was operated from Village Delicatessen by Rocky Prasad — who owned both businesses, according to published reports. Prasad pled no contest on Nov. 21 in Santa Clara County Superior Court to operating Prestige without a lending or business license, stealing up-front costs of $66,000 from two borrowers and falsely advertising on Prestige’s website a successful 20-year history.
A Dec. 7 indictment was unsealed last week against Wiley C. Chandler, Andrew B. Katakis, Donald M. Parker, Anthony B. Joachim and W. Theodore Longley, according to the U.S. Attorney for the Eastern District of California. The five defendants are accused of scheming to rig bids at public real estate auctions from September 2008 until October 2009. They also allegedly fraudulently acquired titles to some auctioned properties and diverted money to co-conspirators.
Artificially low bids from one of the defendants would go uncontested at an initial auction, then a private auction would determine who would land the property.
